Trading Strategy: Sell Relative Weakness

Another opposite strategy, this one is similar to the buy relative strength. We do not wait for a rally in a downtrend, but choose the strongest downtrending security by a process of refinement. The steps are -

• establish that the market is going down
• check that the sector is going down
• the particular financial security is going down
• check the strength relative to other securities
• calculate trade size and stoploss
• enter trade short
• exit trade if failed or on profit

The meaning and indications of these steps will by now be obvious.

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